by James R. Redeker, Esq.
I recently attended a conference sponsored by a federal district court and bar association for lawyers who volunteer to represent pro se plaintiffs in employment cases. I was both complimented and alarmed by what occurred.
The compliment came back-handed from the premier plaintiff's employment lawyer in Philadelphia. This lawyer dedicated a significant portion of her presentation to how plaintiff employment lawyers can and should avoid having to litigate against Wolf, Block's employment litigators. Her advice: do everything you can to create an insured claim so that the employer will use lawyers hired by an insurance company rather than a law firm like Wolf, Block.
The reasoning of this plaintiff's lawyer is worth noting for our employer clients because it focuses on several very real developments in the field of employee relations and employment law litigation. The points were particularly probative since they offered an unusually candid look into the thought process of those who are frequent adversaries. She (and several others who followed her) said,
- 1.Plaintiff's employment lawyers do better when cases settle; fewer than forty percent of employment cases which go to trial result in verdicts for plaintiffs. Therefore, your best chance to recover is through settlement, rather than trial.
- 2.Plaintiffs in employment cases achieve higher settlements when insurance companies are in the picture than when employers are represented by counsel they choose and control.
- 3.Plaintiffs' lawyers have a higher rate of return on effort when an employer is represented by a lawyer hired by an insurance company because settlements occur earlier in the process and the plaintiff's lawyer has not yet expended great effort.
- 4.Insurance companies have a "duty to settle" cases and will rarely take a case to trial (where plaintiffs often lose).
- 5.Insurance companies and their risk managers and lawyers view employment claims as economic problems and decisions are made based on purely economic/cost analyses.
- 6.Where plaintiffs in employment cases are not able to state a claim covered by insurance and the case is handled by the employer's-controlled and customary lawyers, decisions are made based on concerns other than cost, e.g., the stimulus which a settlement may be for other claims, principle, concepts of right and wrong. These other concerns result in arduous litigation which often ends unfavorably for plaintiffs.
Whether what this lawyer said is accurate or not, the fact is that the most successful and prominent plaintiffs' employment lawyers believe and teach it.
To be sure, many employers have concluded that it is prudent to insure employment-related risks, such as claims for discrimination and harassment. These employers were roundly thanked by the speakers at the conference. With respect to those employers who have chosen to keep full control of all aspects of the handling of employment related claims (and, likewise, to keep all of the risk), the first speaker urged her compatriots to be creative. In addition to detailing several torts which could be attached to lawsuits (such as defamation) which may snare general liability coverage, she spent substantial time analyzing and arguing (incorrectly, I believe) that recent court decisions had begun to erode the concept of 'intent' in employment cases. Consequently, while most general liability and umbrella policies purchased by companies exclude claims based on intentional acts and, therefore, have, heretofore, denied coverage for employment related claims, there is now a greater likelihood that acts giving ri e to employment claims can be found not to be "intentional."
If that were to occur, insurance coverage (and the control of the risk manager over the litigation) under general liability or umbrella policies may no longer be denied. Using this reasoning, the lawyer counseled her disciples to demand that employer-defendants in their self-executing disclosures or responses to document requests produce all general liability, directors and officers, umbrella and workers' compensation insurance policies (not Summary Plan Descriptions), as well as employment claims insurance policies for scrutiny of the plaintiff's lawyers.
Where coverage of an employment claim can be argued on any basis, the assembled plaintiffs' lawyers were counseled to demand that the employer report the claim to the carrier and request representation and defense. One speaker went so far as to suggest to me privately that she would engage in such questionable ethical tactic of contacting an employer-defendant's insurance carrier herself, alerting them to the claim against its insured.
Knowing this, employers who do not wish to cede their control over employment-related claims should review all of their insurance policies periodically in light of changes in applicable case law to ensure that they are not insuring risks they wish to retain.
Employers who wish to ensure employment-related claims, should examine their policies and the practices of their carriers, asking at least the following two questions:
- 1.Will the employer be able to control the selection of the law firm to represent it, with the insurance carrier paying some or all of the attorneys' fees?
- 2.Will the employer be able to control whether a case will settle, even where the refusal to settle is on the basis of principle or to avoid teaching others that it is profitable to sue this employer following any adverse employment action, regardless of the merits of the claim?
Where the elimination of risk on employment-related claims comes at the price of losing control over settlement decisions, employers may wish to consider the wisdom of whether other devices for minimizing or eliminating the risk, other than insurance, should be considered. Having proper policies, training and workplace due process systems, while at the same time vigorously defending actions taken in good faith and consistent with the law, may do more to increase employee and managerial morale, loyalty, productivity and profitability than all of the insurance a company could buy.
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Disclaimer
The ideas presented in these materials are general in nature and not intended to be contstrued as legal advice and cannot be relied on by any person or entity as legal advice pertaining to any specific situation.
